[Federal Register Volume 88, Number 223 (Tuesday, November 21, 2023)]
[Notices]
[Pages 81094-81097]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-25650]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-6407-N-02]


Public Interest, General Applicability Waiver of Build America, 
Buy America Provisions as Applied to Pacific Island Territory 
Recipients of HUD Federal Financial Assistance: Final Notification

AGENCY: Office of the Secretary, U.S. Department of Housing and Urban 
Development (HUD).

ACTION: Notice.

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SUMMARY: In accordance with the Build America, Buy America Act (BABA), 
this Final Notice advises that HUD is providing a public interest, 
general applicability waiver for a period of 15-months to the Buy 
America Domestic Content Procurement Preference (``Buy America 
Preference,'' or ``BAP'') as applied to Federal Financial Assistance 
(''FFA'') used for infrastructure projects in the Commonwealth of 
Northern Mariana Islands (``CNMI''), Guam, and American Samoa 
(hereinafter collectively ``Pacific Island Territories'').

DATES: Applicable November 15, 2023. This waiver is effective for all 
FFA obligated by HUD on or after the effective date of this waiver and 
to the expenditure of funds on or after the effective date of this 
waiver for any FFA obligated by HUD prior to the effective date of this 
waiver, through the limited period of 15-months following the effective 
date of this waiver.

FOR FURTHER INFORMATION CONTACT: Faith Rogers, Department of Housing 
and Urban Development, 451 Seventh Street SW, Room 10126, Washington, 
DC 20410-5000, at (202) 402-7082 (this is not a toll-free number). HUD 
welcomes and is prepared to receive calls from individuals who are deaf 
or hard of hearing, as well as individuals with speech and 
communication disabilities. To learn more about how to make an 
accessible telephone call, please visit https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs. HUD encourages submission 
of questions about this document be sent to 
<a href="/cdn-cgi/l/email-protection#195b6c70757d58747c6b707a785b6c6058747c6b707a7859716c7d377e766f"><span class="__cf_email__" data-cfemail="501225393c34113d3522393331122529113d3522393331103825347e373f26">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION:

I. Build America, Buy America

    The Build America, Buy America Act (``BABA'' or ``the Act'') was 
enacted on November 15, 2021, as part of the Infrastructure Investment 
and Jobs Act (``IIJA'') (Pub. L. 117-58). The Act establishes a 
domestic content procurement preference, the BAP, for Federal 
infrastructure programs. Section

[[Page 81095]]

70914(a) of the Act establishes that no later than 180 days after the 
date of enactment, HUD must ensure that none of the funds made 
available for infrastructure projects may be obligated by the 
Department unless it has taken steps to ensure that the iron, steel, 
manufactured products, and construction materials used in a project are 
produced in the United States. In section 70912, the Act further 
defines a project to include ``the construction, alteration, 
maintenance, or repair of infrastructure in the United States'' and 
includes within the definition of infrastructure those items 
traditionally included along with buildings and real property. Thus, 
starting May 14, 2022, new awards of HUD FFA, and any of those funds 
newly obligated by HUD then obligated by the grantee for infrastructure 
projects, are covered under BABA provisions of the Act, 41 U.S.C. 8301 
note, unless covered by a waiver.

II. HUD's Progress in Implementation of the Act Generally

    Since the enactment of the Act, HUD has worked diligently to 
develop a plan to fully implement the BAP across its FFA programs. HUD 
understands that advancing Made in America objectives is a continuous 
effort and believes setting forth a transparent schedule of future 
implementation for FFA programs provides recipients, stakeholders, and 
industry partners with the time and notice necessary to efficiently and 
effectively implement the BAP in Pacific Island Territories, which are 
Commonwealth of Northern Mariana Islands (CNMI), Guam, and American 
Samoa. Additionally, HUD understands that Pacific Island Territories 
have significant complications accessing construction materials, 
manufactured products, and steel needed for infrastructure projects. 
HUD recently announced plans to move forward with the implementation of 
the new BAP requirements in connection with its award of FFA to non-
Tribal recipients in a manner designed to maximize coordination and 
collaboration to support long-term investments in domestic production. 
HUD continues its efforts to implement the Act in those programs 
consistent with the guidance and requirements of the Made in America 
Office of the Office of Management and Budget, including guidance 
concerning compliance with the BAP.
    In order to ensure orderly implementation of the BAP across HUD's 
FFA programs, HUD has provided public interest, general applicability 
waivers in order to implement the BAP in phases in connection with the 
application of the BAP in such programs and announced a corresponding 
implementation plan. As part of those efforts, HUD has published two 
general applicability, public interest waivers covering Exigent 
Circumstances and De Minimis and Small Grants, which can be found at 
https://www.hud.gov/program_offices/general_counsel/build_america_buy_america/waiver.
    Additionally, HUD proposes that it is in the public interest to 
waive the BABA requirements for FFA awarded for infrastructure projects 
in Pacific Island Territories while HUD works to gather more 
information on supply chains, costs, and impacts. This proposed waiver 
is critical to provide the time for HUD to collect and analyze evidence 
to determine if a more targeted waiver of these requirements is in the 
public interest. This waiver would provide the time for the agency to 
collect and analyze evidence to determine if a more targeted waiver of 
these requirements is in the public interest. The waiver would also 
allow time for the agency to offer technical assistance to potential 
assistance recipients in the remote communities in the Pacific Island 
Territories. The waiver would also allow time for HUD to offer 
technical assistance to reduce the administrative burden to recipients 
for projects in the remote Pacific Island Territories were complying 
with the domestic sourcing requirements in BABA presents challenges. 
HUD is concerned that failure to provide these remote infrastructure 
projects such flexibilities could perpetuate systemic barriers to 
opportunities and benefits and limit HUD's ability to deliver resources 
and benefits equitably to all in these Pacific Island Territories. 
Additionally, HUD may need to dedicate significant staff and contractor 
time to assist extremely remote Pacific Island Territories with 
implementing preference requirements for the first time and to support 
the increased workload to process project-specific waivers. As such, 
HUD is interested in determining if these concerns justify a targeted 
waiver and whether its initial assessment may or may not be borne out 
by evidence.

III. Waivers

    Under section 70914(b), HUD and other Federal agencies have 
authority to waive the application of a domestic content procurement 
preference when (1) application of the preference would be contrary to 
the public interest, (2) the materials and products subject to the 
preference are not produced in the United States at a sufficient and 
reasonably available quantity or satisfactory quality, or (3) inclusion 
of domestically produced materials and products would increase the cost 
of the overall project by more than 25 percent. Section 70914(c) 
provides that a waiver under section 70914(b) must be published by the 
agency with a detailed written explanation for the proposed 
determination and provide an appropriate public comment period of 15 or 
30 days depending on the substance of the waiver.

IV. Pacific Island Territories Infrastructure and HUD Programs

    Economies in the Pacific Islands are over 5,000 miles from the 
mainland United States and must import products via air or sea. These 
economies have few local heavy manufacturers and largely rely on 
established regional supply chains from east Asia, Australia, and New 
Zealand. Most goods, equipment materials and supplies are imported and 
rely on shipping with associated timelines and unpredictable shipping 
fuel costs fluctuations. Moreover, materials sourced from the United 
States lead to additional shipping fees and longer lead times, thus 
significantly extending construction activity schedules. Lastly, 
ongoing gaps in supply chain availability impact lead times for 
materials, increasing project timelines. For these reasons, the agency 
is concerned that complying with the domestic sourcing requirements in 
BABA may increase already elevated project time and costs--particularly 
in the short run--and seeks time to better understand the local 
manufacturing footprint and the balance of equities for residents of 
the Pacific Island Territories.
    HUD is aware that substantial changes to shipping and supply chains 
to incorporate domestic sourcing requirements for infrastructure 
projects in Pacific Island Territories could take multiple years to 
establish. For example, these economies have few local heavy 
manufacturers and largely rely on established regional supply chains. 
With the distance of economies in the Pacific Island Territories, these 
communities must import products via air or sea. Most goods, equipment, 
materials, and supplies are imported and rely on shipping with 
associated timelines and unpredictable shipping fuel cost fluctuations. 
Moreover, materials sourced from the United States may lead to 
additional shipping fees and longer lead times, thus significantly 
extending construction activity schedules. For these reasons, HUD is 
seeking time to better understand the local manufacturing

[[Page 81096]]

footprint and the balance of equities for residents of the Pacific 
Island Territories.
    For example, HUD Community Planning and Development Formula Program 
Allocations for Pacific Island Territories include Community 
Development Block Grant (``CDBG''), HOME, Emergency Solutions Grant 
(``ESG''), Housing Opportunities for Persons With AIDS Program 
(``HOPWA''), and Housing Trust Fund (``HTF''). As shown below, there 
are HUD CDBG formula grant recipients that are subject to the BAP 
pursuant to HUD's Public Interest Phased Implementation Waiver \1\ of 
Build America, Buy America Provisions as Applied to Recipients of HUD 
Federal Financial Assistance, for the purchase of iron or steel 
products in infrastructure projects funded by CDBG formula grants 
obligated by HUD on or after November 15, 2022. For HOME and HTF, BABA 
applicability will be in effect for funds obligated by HUD on or after 
August 23, 2024. For all other HUD FFA including ESG and HOPWA, BABA 
applicability will be in effect for FFA used to purchase iron and steel 
used in infrastructure projects for funds obligated by HUD on February 
22, 2024. Subsequently, BABA applicability will be in effect for HUD 
FFA obligated on or after August 23, 2024, for construction materials 
and manufactured products. Therefore, without a waiver, HUD FFA used in 
Pacific Island Territories for infrastructure projects will be subject 
to the BAP.\2\
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    \1\ See https://www.hud.gov/sites/dfiles/GC/documents/6331-N-06%20Phased%20Implementation%20Waiver.pdf.
    \2\ See https://www.hud.gov/program_offices/comm_planning/budget.
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    Additionally, the Public and Indian Housing (``PIH'') Program 
Allocations for Pacific Island Territories include the Guam Housing & 
Urban Renewal Authority in Guam and the Northern Marianas Housing 
Corporation in the CNMI. Pursuant to the phased implementation waiver, 
BABA applicability will be in effect for funds obligated by HUD on or 
after August 23, 2024, for public housing FFA used to purchase iron and 
steel, construction materials, and manufactured products for 
maintenance projects.
    The above-named programs are critical because they allow HUD to 
support affordable housing and infrastructure needs in these specific 
Pacific Island Territories--particularly for the benefit of low- and 
moderate-income families. As of November 15, 2022, the BAP applies to 
CDBG formula grants used to purchase iron and steel for infrastructure 
projects. Accordingly, HUD must ensure that Pacific Island Territories 
Recipients are able to effectively implement the BAP in a manner that 
ensures that the purposes of BABA are carried out, while at the same 
time preventing additional undue barriers to the development of Pacific 
Island Territories infrastructure, which has suffered from decades of 
underinvestment.
    HUD has determined that additional time is needed to fully assess 
the impacts that the BAP will have on Pacific Island Territories 
recipients and to plan for the efficient and orderly implementation of 
the BAP. With the benefit of HUD's recently published phased 
implementation waiver and Tribal consultation waiver extension, HUD 
seeks additional time to seek feedback from Pacific Island Territories, 
and funding recipients on whether and when HUD should take a similar 
phased approach with respect to the implementation of the BAP under its 
Pacific Island Territories programs.

V. Public Interest in a General Applicability Waiver of Buy America 
Provisions for Pacific Island Territories Recipients

    In this Final Notice, HUD is providing a new and limited, 15-month 
public interest, general applicability waiver of the BAP in connection 
with HUD's FFA used for infrastructure in Pacific Island Territories. 
Infrastructure is an eligible activity under some of the above-named 
programs and will be subject to the BAP. Because the application of BAP 
mandated by the Act is new to all HUD FFA for Pacific Island 
Territories infrastructure projects, HUD needs additional time to 
engage Pacific Island Territories about the application of the BAP for 
Pacific Island Territories projects it is imperative to determine how 
the BAP should be effectively applied to HUD's various FFA for Pacific 
Island Territories projects, how the BAP should be phased in to allow 
for successful implementation, and how compliance will be verified--all 
in a way to enhance infrastructure projects in these areas. As such, 
there is a significant need for HUD to further engage with Pacific 
Island Territories recipients. HUD now has the benefit of having fully 
considered an appropriate method of phased implementation across its 
other FFA programs and has begun the methodical implementation of the 
BAP in those other FFA programs. At the same time, HUD has determined 
that it is in the public's interest to not apply the BAP to FFA awarded 
for infrastructure projects in Pacific Island Territories prior to 
additional engagement.

VI. Planned Pacific Island Territory Engagement

    Based on HUD's observations it is necessary for HUD to solicit 
feedback from Pacific Island Territories on issues including how to 
effectively implement the BAP for extremely remote communities, such as 
American Samoa. HUD acknowledges that Pacific Island Territories have 
major concerns about availability of American-made products from the 
U.S. Mainland and continue to struggle with challenges because of their 
distance away from main supply sources. Pacific Island Territories are 
already facing major challenges with accessing construction materials, 
and major cost overruns due to a lack of available materials--
particularly in remote Pacific Island Territories.
    During the 15-month waiver period, HUD will thoroughly engage 
Pacific Island Territories housing practitioners, stakeholders, and FFA 
recipients. HUD will do so by soliciting feedback from Pacific Island 
Territories and stakeholders specifically addressing the impact of the 
BAP on HUD's Pacific Island Territories programs. After engaging and 
receiving feedback, HUD will seek to implement the BAP in a manner that 
advances the Made in America objectives which can also support local 
supply chains. HUD will implement the BAP in a thoughtful manner that 
ensures that Pacific Island Territories recipients can effectively 
implement the BAP without substantially negative impacts on planned and 
ongoing critical infrastructure projects. HUD will also seek to provide 
additional technical assistance resources to ensure that Pacific Island 
Territories recipients can build capacity and be in a better position 
to comply with the BAP.

VII. Assessment of Cost Advantage of a Foreign-Sourced Product

    Under OMB Memorandum M-22-11, ``Memorandum for Heads of Executive 
Departments and Agencies,'' published on April 18, 2022, agencies are 
expected to assess ``whether a significant portion of any cost 
advantage of a foreign-sourced product is the result of the use of 
dumped steel, iron, or manufactured products or the use of injuriously 
subsidized steel, iron, or manufactured products'' as appropriate 
before granting a public interest waiver. HUD's analysis has concluded 
that this assessment is not applicable to this waiver, as this waiver 
is not based on the cost of foreign-sourced products.

[[Page 81097]]

VIII. Limited Duration of the Waiver

    The duration of the waiver is 15-months after the effective date of 
the final waiver. HUD remains committed to the successful 
implementation of the important BAP across its programs providing 
covered FFA for infrastructure projects, while recognizing the unique 
needs and geographically related challenges of Pacific Island 
Territories. HUD is committed to engaging with Pacific Island 
Territories, stakeholders, and FFA recipients as noted above to further 
this goal during this 15-month waiver period. HUD will review this 
waiver in 12 months to assess whether it remains necessary to the 
fulfillment of HUD's missions and goals and consistent with applicable 
legal authorities, such as the IIJA, Executive Order 14005, and OMB M-
22-11. HUD may, based on the results of that review, terminate the 
waiver, or take action to develop a new waiver in consultation with the 
MIAO.

IX. Solicitation of Comments

    HUD solicited comments from the public on its proposed waiver 
described in a Notice publicly available on its website for a period of 
30 days from August 2, 2023 to September 1, 2023, and published in the 
Federal Register. A total of two comments were received in response to 
the proposed waiver. HUD thoroughly reviewed and considered each of the 
comments in determining to move forward with the issuance of this 
waiver and implementation plan as published in this Final Notice. One 
commenter was supportive of the waiver. One commenter was opposed to 
the waiver with respect to steel, citing underutilized domestic 
capacity for the steel industry. The commenter suggested if a steel 
product were not available from domestic sources, a grant recipient 
could pursue a product-specific nonavailability waiver for that item. 
HUD appreciates the comments and did not make any substantive changes 
to the waiver based on the comments received. The proposed waiver had a 
duration of 18-months. HUD is issuing the final waiver with a duration 
of 15-months to better align with the coordinated strategy for the 
issuance of this waiver type across the Federal Government. HUD 
believes the 15-month waiver of the application of the BAP as set forth 
in this Final Notice is appropriate and in the public interest in light 
of the importance of HUD's planned engagement with Pacific Island 
Territories and recipients. HUD will continue to monitor the 
implementation of the BAP across its programs to ensure the most robust 
application possible in light of the important public interests 
discussed above.

    Dated: November 15, 2023.
Marcia L. Fudge,
Secretary.
[FR Doc. 2023-25650 Filed 11-20-23; 8:45 am]
BILLING CODE 4210-67-P


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